Monday, October 22, 2007

Lulu lo-loses first round of trademark hubbub with Hulu

In the trademark infringement lawsuit brought by Lulu Enterprises, Inc. ( against N-F Newsite, LLC (a/k/a (see prior Vegas™Esq post here), the District Court, on Friday, October 19, 2007, denied Plaintiff Lulu’s request for a preliminary injunction against Defendant Hulu. See Lulu Enterprises, Inc. v. N-F Newsite, LLC, Case No. 5:7-CV-347-D, Document 116 (E.D. N.C.) (download order here).

The court first explained the four factors for deciding whether to grant a preliminary injunction:
  1. likelihood of irreparable harm to the plaintiff if the injunction is denied, where the irreparable harm is actual and imminent, and not remote or speculative;

  2. if plaintiff shows actual and imminent irreparable harm, then harm must be balanced against the likelihood of irreparable harm to the defendant if the injunction granted;

  3. likelihood that plaintiff will succeed on the merits, where the extent of the likelihood of success that needs to be shown depends on the balance of the harms (i.e., if balancing the harm favors the plaintiff, then plaintiff need only show serious questions about the merits of the case that are fair grounds for litigation; whereas if the balancing the harm favors the defendant, then plaintiff must show strong probability of success of the merits; and

  4. whether the injunction would serve public interest.

See Direx Israel, Ltd. v. Breakthrough Med. Corp., 952 F.2d 802 (4th Cir. 1991).

While the court also set forth the Fourth Circuit’s seven factor test for determining likelihood of confusion in order to assess Lulu’s unfair competition claim (see CareFirst of MD., Inc. v. First Care, P.C., 434 F. 3d 263, 267 (4th Cir. 2006)), the court determined that such analysis was not necessary because Plaintiff’s asserted harm was not actual and imminent. The mere existence of irreparable harm is not enough – the plaintiff must make a clear showing of irreparable harm that is actual and imminent.

Lulu’s argument of irreparable harm rested on the premise that Hulu was intending to enter Lulu’s line of business. Lulu cited to Hulu’s intent-to-use trademark application, but the court rejected the long list of goods and services set forth in Hulu’s registration application, instead reinforcing that what matters is how the marks are used in the marketplace. Lulu also cited to a Hulu’s responses to discovery interrogatories as well as statements by Lulu representatives during depositions. However, the court felt that this evidence was outweighed by other sealed evidence as well as Hulu’s statements at oral argument which indicated that Hulu’s plans “are very narrow and are limited exclusively to making big-budget feature TV and movie content available for its user.” Order at 7.

In short, the court believed that Hulu did not intend to enter Lulu’s line of business (internet self-publishing) once Hulu fully launched its website, and thus faces no actual or imminent harm from Hulu’s business. The court did emphasize, however, that this decision to deny the injunction under the unfair competition claims was based strongly on Hulu’s good-faith assurance about what its website will and will not contain, and the court intends to hold Hulu to its word.

The court also denied a preliminary injunction based on Lulu’s cyberpiracy claims on the grounds that Plaintiff could not show bad faith on the part of Hulu in choosing the URL

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